How Congress, SBA can help close the small-business gender gap

WASHINGTON — A recent congressional report found that women own nearly a third of the country's small businesses, yet they account for less than 5 percent of the money borrowed through traditional small-business loans.

A disproportionately large number of female entrepreneurs seek what often are considered “microloans,” which generally fall between $5,000 and $50,000.

But the report, released by the Senate Small Business and Entrepreneurship Committee, notes that the gap in dollars awarded cannot be entirely attributed to the size of loans women are seeking. Rather, researchers found that female business owners are more often turned down for loans than their male counterparts, and those who do manage to secure capital generally do so under much less favorable terms.

“Women entrepreneurs still face a glass ceiling,” the authors of the Senate report wrote.

It isn't just in the lending arena that female entrepreneurs are facing a gender gap. Despite programs intended to direct government work to women-owned firms, many more federal contracts still go to companies owned by men, according to the report. Moreover, women receive only a small fraction of venture-capital dollars.

Several female business leaders have ideas on how lawmakers could take steps to give female entrepreneurs a greater shot at success:

Barbara Corcoran, founder of the Corcoran Group in New York and shark investor on ABC's “Shark Tank,” said too few entrepreneurs are aware of the resources offered by the Small Business Administration. She thinks the agency is missing out on strategic partnership opportunities that could help drive referrals to its lending and counseling services.

Specifically, she advised the agency to team with the growing number of online crowdfunding platforms and business incubator programs across the country to help get the word out about its programs.

Veronica Davis, partner and principal planning manager of the business consultancy Nspiregreen LLC in Washington, suggested the SBA ease restrictions on its microloan program — an initiative popular with women-owned firms, under which the SBA provides loan funds through third-party nonprofits. She said the current effort includes too many rules that preclude those nonprofits from tailoring their offerings to best meet the borrower's needs.

Lynn Sutton, chief executive of Advantage Building Contractors in Atlanta, noted that her company broke into the government services arena thanks largely to a roofing contract it was awarded under what's known as sole sourcing. The term refers to contracts negotiated directly between an agency and a private company, thus bypassing the conventional bidding process. She asked lawmakers to consider legislation that would allow sole-source contracts to be awarded as part of an existing female-owned small-business procurement program.